Asda to fuel price war with £500m investment

Monday 11 January 2016 - Philip Gallagher

Asda rival the discounter by investing £500m into cutting prices in what CEO Andy Clarke described as a year of “intense pressure” for the supermarket industry.

Clarke called it “radical action to win back our customers,” and radical action may well be the most appropriate course. Christmas was disappointing for the retailer, with sales falling 3.4%, whilst the three months leading to the end of September marked the company’s fifth consecutive month of falling profits.

The decision to invest comes on the back of the £1bn that the big four grocer announced would be used to tackle Aldi and Lidl in November 2013. Despite saying that the money would be utilised over 5 years, Asda hasn’t made any major comeback against the value retailers, which now make up 10% of the British supermarket industry. Their sales remained consistent over Christmas.

“There is currently no growth in the food market and the rise of the limited assortment discounters means that we must take radical action to win back our customers,” Clarke said.

“Our eyes are open to the fact that more impactful changes and decisive action still needs to be taken to make sure we remain not only a viable business, but a strong market-leading one.

We saw the change coming and responded in 2013, but we didn't move fast enough."